Hire Purchase and Lease Purchase
After paying an initial deposit, the balance of the purchase price is repaid by monthly payments. The agreement can be between one and four years and when all the payments
have been made you become the owner of the vehicle. These options are appropriate if it is important to you to retain your vehicles as company assets.
Straight-forward payment structures are available. There are a number of flexible options which enable you to increase the initial deposit and/or make a final "balloon payment".
This enables you to adjust the level of your monthly costs.
You can also base the repayments on fixed or variable interest rates.
The vehicle is classified as a balance sheet asset which allows you to write down the value against your taxable profits.
The initial outlay is smaller than outright purchase and the spread cost helps you to manage cash flows.
Your vehicles are treated as a balance sheet asset, enabling you to claim capital allowances.
The interest on repayments can usually be offset against taxable profit.
Remember the following considerations:
- You cannot recover the VAT on the purchase price of the vehicles.
- All risks of ownership, maintenance, administration and disposal remain with you.
- You may need to allow for the additional cost of providing internal or third party fleet administration.